Funding the war: the role of European banks in Russia

The leading European banks active in Russia collectively amassed profits surpassing €3 billion (£2.6 billion) in 2023, the FT reported.

A recent report from the Financial Times has shed light on a concerning reality: Western banks operating in Russia are contributing significant sums to the Kremlin’s coffers, thereby indirectly funding the ongoing conflict in Ukraine.

In 2023, the largest Western banks still active in Russia collectively paid over €800 million (£684 million) in taxes to the Kremlin. This figure represents the financial support flowing from international financial institutions into the war effort more than two years after it began.

The leading European banks active in Russia, such as Raiffeisen Bank International (Austria-based), UniCredit (Italy), ING (The Netherlands), Commerzbank (Germany), Deutsche Bank (Germany), Intesa Sanpaolo (Italy), and OTP (Hungary), collectively amassed profits surpassing €3 billion (£2.6 billion) in 2023. This figure marks a threefold surge compared to the preceding year. Notably, all these banks incorporate leasing and asset finance divisions within their comprehensive suite of financial services.

Western banks have also benefited from sanctions on the Russian financial sector, with restrictions on Swift payments making them vital intermediaries.

Vladimir Putin's administration has been actively seeking avenues to bolster its war economy, resorting to measures such as curbing the output of Russian oil to artificially inflate global oil prices. However, the reliance on tax revenues from Western banks underscores the extent to which international financial institutions sustain the Kremlin's aggressive actions.

While these banks may argue that their operations in Russia are essential for maintaining financial stability and providing services to local businesses and consumers, the ethical implications of indirectly financing a conflict cannot be overlooked. By continuing to operate in Russia and funnelling substantial sums into the Kremlin's coffers, Western banks inadvertently perpetuate a cycle of violence and instability in the region.

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As stakeholders in the global financial system, it is imperative for these institutions to critically assess their role in perpetuating conflicts and to consider the broader ethical ramifications of their operations. Ultimately, the choices made by Western banks in Russia have far-reaching consequences, not only for the Ukrainian people but for global peace and security as a whole.

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